The Post Office has welcomed the research by Which? Magazine which has highlighted the use of underhand sales tactics to automatically add payment protection insurance (PPI) to a loan), even though it is not compulsory. Head of communications Claire Oldstein said: ‘Many customers have little understanding of PPI and some do not even realise they have this insurance in force. Others, who have been at the hands of aggressive sales tactics, can feel they have no choice but to take the expensive policy tied to a loan or credit card if they want their application to be accepted.’
PPI costs can vary widely according to the provider, with little or no link to the true cost of providing the insurance and paying claims. Companies which offer PPI have been profiting for decades, says the Post Office, which has called for an end to single premium PPI. This type of PPI may be added to a loan, so that interest is also paid on the premium. However, this is not revealed in APRs. The Post Office has also called for PPI providers to sell suitable products which cover a customer’s bills rather than a single product and to make it clear what is covered and what is excluded.
Insurancewide.com has also responded to the Which? report. Chief executive James Harrison commented: ‘Buying the policy is not enough, you need to understand it and to understand the mechanics of making a claim. Ask yourself why you are really buying insurance. If you aren’t sure about every aspect of the policy it could be a wasted investment and you’ll have false peace of mind about the extent to which you’re covered.’
He also highlighted the need for customers to disclose all relevant circumstances to the insurers, warning: ‘You will end up paying more in the long run if your insurer refuses to settle a claim due to non-disclosure or if you have bought the wrong type of policy. It is your responsibility to tell the insurer, not the responsibility of the insurer to find out.’
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